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France Telecom, Alcatel Sign France-Africa Cable Deal

June 8, 2010

France Telecom, Alcatel Sign France-Africa Cable Deal (Update1)
June 08, 2010, 11:39 AM EDT 

(Updates with executive comment in seventh paragraph.)

By Matthew Campbell

June 8 (Bloomberg) — France Telecom SA and a consortium of African telecommunications operators signed an accord to build a $700 million fiber-optic cable from western France to Cape Town, linking African countries to global high-speed data networks.

The undersea “Africa Coast to Europe” cable will serve 23 countries, and include a $250 million investment from France Telecom, the Paris-based company said in a statement. Alcatel- Lucent SA, also based in Paris, will construct the link, it said in a separate statement.

France Telecom is looking to Africa and the Middle East for revenue as growth slows in its core European markets. Chief Executive Officer Stephane Richard said in April that the company could spend as much as 7 billion euros ($8.4 billion) on deals in those regions as part of a strategy to double emerging- market revenue.

The submarine link will “democratize Internet access in the region” by reducing the cost of bandwidth and removing a barrier to the development of Internet use, France Telecom said.

Telecommunications companies operating in Africa have struggled to raise revenue per user in a market dominated by inexpensive voice and text traffic, rather than broadband. In April, MTN Group Ltd., the largest African mobile operator, said average revenue per user fell to $11 a month in Nigeria from $12 in the previous quarter.

The 17,000 kilometer (10,566 mile) cable is scheduled to enter service in the first half of 2012 and will be the first- ever optical broadband link for countries such as Guinea, Liberia, and Mauritania. In Senegal, Cote d’Ivoire, and Cameroon, it will complement another France Telecom cable.

Much of the route will be at depths of 2 to 3 kilometers, at which “the cable actually wants to lay itself” as it’s unspooled from ships, Leigh Frame, a vice president in Alcatel’s submarine division, said by phone. “In a depth of water of 3 kilometers, the touchdown point is actually 10 to 12 kilometers behind the ship, so you’ve got a lot of cable trying to pull itself out.”

Some sections of the cable will lie at depths of 5 kilometers.

Some countries don’t have networks on land that can fully exploit better broadband links abroad, Frame said. Countries with no existing links to fiber-optic cable “probably lack some of the infrastructure currently to take advantage of what’s landing on the coast.”

–Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Matthew Campbell in London at mcampbell39@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.

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